Leading the digital transformation of metal distribution

Transcription

1 Leading the digital transformation of metal distribution October 2017 Digital strategy Klöckner & Co SE October 2017

2 Disclaimer This presentation contains forward-looking statements which reflect the current views of the management of Klöckner & Co SE with respect to future events. They generally are designated by the words expect, assume, presume, intend, estimate, strive for, aim for, plan, will, endeavor, outlook and comparable expressions and generally contain information that relates to expectations or goals for economic conditions, sales proceeds or other yardsticks for the success of the enterprise. Forward-looking statements are based on currently valid plans, estimates and expectations. You therefore should view them with caution. Such statements are subject to risks and factors of uncertainty, most of which are difficult to assess and which generally are outside of the control of Klöckner & Co SE. The relevant factors include the effects of significant strategic and operational initiatives, including the acquisition or disposition of companies. If these or other risks and factors of uncertainty occur or if the assumptions on which the statements are based turn out to be incorrect, the actual results of Klöckner & Co SE can deviate significantly from those that are expressed or implied in these statements. Klöckner & Co SE cannot give any guarantee that the expectations or goals will be attained. Klöckner & Co SE notwithstanding existing obligations under laws pertaining to capital markets rejects any responsibility for updating the forward-looking statements through taking into consideration new information or future events or other things. In addition to the key data prepared in accordance with International Financial Reporting Standards, Klöckner & Co SE is presenting non- GAAP key data such as EBITDA, EBIT, Net Working Capital and net financial liabilities that are not a component of the accounting regulations. These key data are to be viewed as supplementary to, but not as a substitute for data prepared in accordance with International Financial Reporting Standards. Non-GAAP key data are not subject to IFRS or any other generally applicable accounting regulations. Other companies may base these concepts upon other definitions. Digital strategy Klöckner & Co SE October 2017

3 Agenda 1 Overview 2 Digitalization of KCO 3 Platform strategy 4 Focus of kloeckner.v 5 Further initiatives to support the digital transformation of Klöckner & Co Digital strategy Klöckner & Co SE October 2017

4 01 The fundamentals of steel distribution remain challenging Customers Competition Generally not bound to any supplier because of the generic nature especially of commodity steel (low switching costs) Often under price pressure especially where steel is making up a major part of their costs Steel distribution markets remain fragmented. Even larger acquisition activity in the US has primarily resulted in fewer owners; capacity has been with the exception of Kloeckner Metals consolidated to a lesser degree Competition especially for commodity steels mainly on price, availability and reliability are enablers Mill-backed distributors in Europe have a market share strategy in order to utilize assets instead of focusing on profitability Global steel markets Global steel demand is expected to grow only slowly going forward Overcapacity in the steel industry spread across the world, but most pronounced in China is likely to stay for the foreseeable future 4

5 01 Current linear steel supply chain is highly inefficient and intransparent No effective information and data exchange on available inventory, lead times etc. SUPPLIERS STOCKHOLDING CUSTOMERS Klöckner & Co Other Distributors Long delivery times, incorrect deliveries and high inventory levels 5

6 01 The future steel supply will be dominantly facilitated vertical platforms SUPPLIERS Proprietary online portals and internal digitalization Onlineshop Contract Portal Part Manager EDI (ERP-2-ERP) CUSTOMERS O P E N I N D U S T R Y P L AT F O R M Commodity and specialized HVA services 3RD PARTIES OTHER DISTRIBUTORS/ SSC 6

7 Proprietary company specific vertical platforms Industry specific vertical platforms 01 and complemented by more general horizontal platforms Horizontal cross industry platforms XOM Industry Platform Standard products Standard formats Standard formats Steel specific services, e.g. Laser cutting Profiling Surface treatment Customer service Steel specific services, e.g. Laser cutting Profiling Surface treatment Customer service The more vertical the more specific The more horizontal the more general KCO specific HVA services, e.g. 3D lasers PVD 3D printing Proprietary online portals and internal digitalization Onlineshop Part Manager Contract Portal EDI (ERP-2- ERP) Overlaps 7

8 01 Each sales channel fulfills different customer requirements Access to the full range of steel and metal products and more general steel specific services Full transparency and price comparison => Preferably for price sensitive buyers Access only to KCO-specific assortments and services => Preferably for customers where KCO fulfills most of the product and service requirements Access only to standard steel and metal products without additional services => Preferably for less frequent and low volume buyers (long tail) 8

9 01 KCO itself will be enabled to sell through all kind of digital sales channels Proprietary KCO specific vertical platforms Proprietary online portals and internal digitalization Onlineshop Part Manager KCO HVA & supply chain business Contract Portal EDI (ERP-2- ERP) Industry specific vertical platforms Commodity and stockholding XOM - Fulfillment Horizontal crossindustry platforms Higher value add business Other 9

10 01 All principle business models will be covered too digital Digitalization of KCO XOM Industry Platform physical XOM Fulfillment traditional (linear) platform (multi-sided) 10

11 01 The transformation itself will be driven in two separate workstreams Ideation and Creation Technical Scaling Technical/ Financial Scaling Financial Scaling Digitalization of KCO Onlineshop Contract Portal Order Transparency Tool Part Manager Service Portal Kloeckner Direct Digital rollouts Marketplace for complementary products Open API ERP integration (OCI, Sage, MyOpenFactory) Increasing offering of HVAS Increased focus on HVAS in online portals MVP Launch Technical Scaling Financial Scaling XOM Industry Platform Steel only Multiple vendors per product Product search Universal product catalogue Ratings Price suggestions Fulfillment ERP integration (OCI, Sage, MyOpenFactory) Customer support Supplier integr. Purchasing Finance service Specialty metals Advertising service Supply platform 11

12 Agenda 1 Overview 2 Digitalization of KCO 3 Platform strategy 4 Focus of kloeckner.v 5 Further initiatives to support the digital transformation of Klöckner & Co Digital strategy Klöckner & Co SE October 2017

13 02 Digitalization of KCO follows a structural work stream Ideation and Creation Technical Scaling Technical/ Financial Scaling Financial Scaling Digitalization of KCO Onlineshop Contract Portal Order Transparency Tool Part Manager Service Portal Kloeckner Direct Digital rollouts Marketplace for complementary products Open API ERP integration (OCI, Sage, MyOpenFactory) Increasing offering of HVAS Increased focus on HVAS in online portals MVP Launch Technical Scaling Financial Scaling XOM Industry Platform Steel only Multiple vendors per product Product search Universal product catalogue Ratings Price suggestions Fulfillment ERP integration (OCI, Sage, MyOpenFactory) Customer support Supplier integr. Purchasing Finance service Specialty metals Advertising service Supply platform 13

14 02 and is driven by our digital hub kloeckner.i KCO started their digitalization already four years ago with KCI as digital hub in Berlin and invested until mid of 2017 about 25m in KCI More than 60 digital experts in innovation & product, software development, digital marketing & sales and business intelligence & analytics Application of innovative startup methods such as design thinking, lean startup and rapid prototyping enables accelerated implementation Far enough from Klöckner to act independently, yet close enough to leverage expertise as well as access to customers and suppliers 14

15 02 kloeckner.i as separate business unit to maximize speed but integrated approach to leverage existing assets and capabilities Know-how transfer - Assets Resources - Intellectual property Playing field of incumbents Processes - Reliable processes, perfection - Lean start-up, agile, failure culture Focus - Margin - Scale Playing field of fast moving start-ups - EBITDA KPIs - Conversion rates etc. Transformation 15 Digital strategy Klöckner & Co SE October 2017

16 02 Lean, agil and customer centric innovation process Corporates Startups Plan Implement Monitor 16 Digital strategy Klöckner & Co SE October 2017

17 02 kloeckner.i not only works but is also organized like a startup Innovate Build & operate Scale digital business Support decisions Digital innovation & disruption Digital products & software development Digital Sales, marketing & support Business Intelligence & Analytics Design Thinking Operate products and tools Online Marketing & Sales Data Science Lab User Testing Co-operation with branches Lean and agile Software Development Usability and optimization Quality Assurance Coordination with Group IT Customer Satisfaction Roll-Out support for digital solutions Tracking and Monitoring Customer Service Provide data based decision support Manage and operate online analytics Campaign Monitoring and measurement of results Partners: - diva-e - etventure - Google Cloud Platform - SAP Hybris - TLGG - Aera - Arago - Sage - Trumpf/AXOOM Google AdWords Jump Start Program - DFKI (German Research Center for Artificial Intelligence) - Fraunhofer Institut - KIANA Systems 17 Digital strategy Klöckner & Co SE October 2017

18 02 We started small with focus on the build-measure-learn cycle Started with 2 employees in Betahaus in Berlin First Onlineshop MVP launched Founding of kloeckner.i (KCI) First office rented for KCI Launch of Onlineshop in EU Launch of Contract Portal/ Part Manager in EU and US Launch of Service Portal Kloeckner Connect Launch of additional customer-centric tools like the Order Transparency Tool Expansion of KCI to more than 60 people of different functions and move into bigger office Launch of Klöckner Direct in the US Launch Klöckner Marketplace for complementary products as MVP Launch XOM as MVP 18

19 02 Overview of the main digital portals and tools Kloeckner Connect Kloeckner Connect is a portal combining all services we provide. Find all the digital solutions at first glance. Benefits for the customer: Portal which connects all relevant information on our digital products and services It informs about online tools, interfaces and intl. networks Contract Portal/ Part Manager It supplies information on all current and historical contracts and allows materials to be called-off. Onlineshop/ Marketplace Onlineshop makes ordering steel more comfortable than ever no matter where or when. Kloeckner Direct US customers are granted transparency in terms of stock availability at specific branches. Currently updated to a comprehensive onlineshop. Order Transparency Tool This tool grants access to all information concerning the current and historical orders. Benefits for the customer: All Klöckner contracts at a glance View individual material stock Look into future and historical material call-offs Benefits for the customer: Abandon time and place bound ordering Instant quotes; easy order, reorder, bulk order Lower transaction costs/ lower stock Benefits for the customer: Direct view into the branches stock and availability Quote generation easy and convenient online, saves time Create and send a request for a quote Benefits for the customer: Complete overview of all open and closed orders Check the status of future deliveries Intuitive and user friendly interface 19

20 02 Service portal Kloeckner Connect as central access point for customers to Onlineshop, Contract Portal and various digital tools Key facts Responsive design for mobile and smartphone access Starting point for the digital journey of KCO s customers Important source for KCO s SEO*-ranking SEO is a specific discipline focused on the optimizations needed on content that is relevant to users and ultimately attracts the right customers to the business Rankings in SEO refers to a website s position in the search engine results page influenced by various ranking factors Important role for overall digital marketing * Search engine optimization 20 Digital strategy Klöckner & Co SE October 2017

21 02 European Contract Portal for customers with time, volume and product contracts Key facts Clearly structured overview of prices, volumes and maturity dates Order-Release 24/7 by mouse click via PC or tablet Option to contact KCO sales agent for new contract negotiations Fully integrated into service portal Kloeckner Connect OCI interface to ERP systems of customers Integrated into third party platform Axoom (Trumpf) 21 Digital strategy Klöckner & Co SE October 2017

22 02 The Part Manager has become an important sales channel for flat rolled products in the US Key facts Clearly structured overview of prices, volumes and maturity Real-time availability of parts and pending orders Placement of orders directly from the shop floor via tablet Forecasted and historical consumption Online release of consigned goods Currently redesign for better customer experience customer quote: "Parts Manager has been a great tool for us here at the Whirlpool Tulsa plant. It has allowed my team to place daily steel orders more accurately and efficiently, which has opened up more time for us to move our business forward and make improvements that are critical to our success." 22 Digital strategy Klöckner & Co SE October 2017

23 02 Onlineshop further advanced Key facts Live in Germany, Austria, the Netherlands, United Kingdom Further rollouts in France this year and in Belgium in 2018 Offers full price and delivery time transparency Integration into ERP systems of customers via OCI interface Open for 3rd party sellers / distributors with complementary products shortly Possibility of payment via credit card shortly Third party interface via webservice API Fully integrated into service portal Kloeckner Connect 23 Digital strategy Klöckner & Co SE October 2017

24 02 Offering the full range of steel and metals through Onlineshop marketplace feature without inventory build-up KCO Germany Flat Steel Profiles Tubes Bright Steel Quality Steel Stainless Aluminum Copper & Bronze Current focus Supplier A X Supplier B X Supplier C X Supplier D X X X

25 02 Kloeckner Direct will be expanded to a comprehensive Onlineshop for the US Key facts Online product catalog of KCO in the US Focus on spot market Better overview of stock availabilities within a region Automating quote and order process Rolling out to >130 customers in the first stage in May 2017 Continuous development to a comprehensive Onlineshop fully inhouse in 2018 Total investment until June ,7m 25 Digital strategy Klöckner & Co SE October 2017

26 02 The Order Transparency Tool helps KCO s customers to manage their orders and track deliveries from one single interface Key facts Easy overview of orders for all customers Tracking of order status and deliveries Easy access to invoices and mill certificates Integration into Onlineshop under development Already close to active users 26 Digital strategy Klöckner & Co SE October 2017

27 02 Comprehensive rollout of digital portals and tools Service Portal/ Kloeckner Connect Contract Portal/ Part Manager launched Rollout in 2018 launched launched Rollout in 2018 Onlineshop/ Kloeckner Direct launched Rollout 2017 Rollout 2018 launched Order Transparency Tool launched Rollout

28 02 Overview of further digital solutions OCI/ EDI This interface allows a direct connection between an ERP and the Klöckner Onlineshop. Benefits for the customer: Klöckner plugin for the SAGE 100 ERP System Enables ERP to ERP communication Lowers transaction costs significantly Application programming interface (API) Klöckner API is a REST interface which allows to easily connect with third party systems. Benefits for the customer: Klöckner products can be delivered in third party systems Quotes and orders possible via REST API Developer community to build business models around the API Sage 100 This solution allows a direct connection to Klöckner ordering system and coordinates business processes. Benefits for the customer: More transparency and an automatic exchange of information Efficient processes which increase your competitive edge Transparent insights into current purchasing conditions 28

29 02 Overview of other measures to increase online sales Online Marketing Elaborated online marketing campaign which initially focuses on anorganic cost per click campaigns Within the last 18 months we shifted towards a more healthy marketing mix High focus on communication with the customer via social media Established global digital brand enables us to have access to greater talent pool Business performance and analytics Collection of company wide data and analysis through advanced analytics and business insights Leading position through extensive build up of inhouse capabilities Online-offline tracking to enable data driven real time decisions Working on e.g. pricing insights and international pricing algorithms 29

30 02 Digital channels already contribute to 15% of KCO s total sales in Q Service Portal Kloeckner Connect Diverse digital portfolio can serve all customer types from small to large enterprises Sales Split Q Onlineshop Contract Portal 15% Part Manager Order Transparency Tool EDI Online Offline Comprehensive online services for all kind of customers 30

31 02 Well on track to reach 50% online sales target until beginning of 2020 Sales in % per year 60% 50% Key success factors 40% 20% 9% 13% 15% 17% 0 Jan.-15 Jan.-16 Jan.-17 Jan.-18 Jan.-19 Jan.-20 Advanced digital mindset in sales organization More data driven sales Better online marketing Further improved online customer service New and extended functionalities Digital sales per month more than duplicated since January

32 Expenses Sales 02 Internal and external digitalization drives efficiency and sales Increasing sales by Acquisition of new customers Extension of sales range +0.5% Elimination of business hour dependency Increasing focus on customer service ~3.5% EBITDA margin ~4.3% EBITDA margin Extension of portfolio through 3 rd party products Reducing operating expenses through +0.3% Less transaction and administration costs Lower stockholding and therefore improved NWC Higher logistics and warehousing efficiencies Today Tomorrow Less support costs Increased flexibility 32

33 Agenda 1 Overview 2 Digitalization of KCO 3 Platform strategy 4 Focus of kloeckner.v 5 Further initiatives to support the digital transformation of Klöckner & Co Digital strategy Klöckner & Co SE October 2017

34 03 The multi sided industry platform is a new central and finally completely separate work stream Ideation and Creation Technical Scaling Technical/ Financial Scaling Financial Scaling Digitalization of KCO Onlineshop Contract Portal Order Transparency Tool Part Manager Service Portal Kloeckner Direct Digital rollouts Marketplace for complementary products Open API ERP integration (OCI, Sage, MyOpenFactory) Increasing offering of HVAS Increased focus on HVAS in online portals MVP Launch Technical Scaling Financial Scaling XOM Industry Platform Steel only Multiple vendors per product Product search Universal product catalogue Ratings Price suggestions Fulfillment ERP integration (OCI, Sage, MyOpenFactory) Customer support Supplier integr. Purchasing Finance service Specialty metals Advertising service Supply platform 34

35 03 Digital platforms will quickly spread throughout many B2B-industries P2P Peer-to-Peer The first generation of large and often disruptive internet platforms covered mainly information industries and entirely digitalizable services like music and banking B2C Business-to- Customer The next generation of now Online-to-Offline (O2O) platforms covered a wide range of consumer driven industries like urban transportation (Uber and Lyft), lodging (Airbnb), food delivery (Grubhub, Just Eat, Delivery Hero) and many others B2B Business-to- Business The same economic fundamentals which drive consumer O2O-platforms apply also for goods and services that companies exchange with each other 35

36 03 and become the dominating business model of the 21st century Platforms... succeed by introducing better and much broader offerings to customers through marketplaces scale through network effects caused by the ability to leverage and orchestrate global connected ecosystems create value by enabling communication and commerce that might not otherwise occur and by reducing waste and inefficiencies as well as a faster supply and demand matching move themselves between the producer and the customer and thereby take over the customer and a significant part of the value creation extend in a way traditional supply chains cannot once they have established a strong network around its original core transaction link existing customers stronger to the business due to their inherent superior advantages for the customer 36

37 03 KCO as an incumbent has several advantages in building a successful industry platform Access to customers and suppliers No hen-and-egg problem by having a huge customer and supplier base in the European and US market Deep industry know-how KCO knows how to handle the supply chain, has comprehensive product and processing know how and understands the expectations of customers and suppliers Reliability and trust KCO is since decades trusted by the industry and a reliable partner of its customers and suppliers Extensive steel e-commerce experience KCO has operated e-commerce and digital portals in the steel industry since a couple of years and hence has a deep understanding of the inherent challenges and new business models 37

38 03 Building up on existing technology enables a quick launch of the XOM Industry Platform MVP KCO Onlineshop XOM Industry Platform (MVP) Δ Additional functionalities for XOM Industry Platform (MVP) include: Multiple vendors per product Product search functionality Universal product catalog Ratings Price suggestions 38

39 03 Marketplace and storefront designs already created Marketplace Default channel Global marketing campains Default content with entire marketplace offering ( Ebay view) All products listed (promotion slots available) Customers can search for specific suppliers Storefront Additional paid sales channel Can receive own traffic Own marketing Supplier Supplier specific storefront on marketplace (shop-in-shop) Shows only specific supplier products and offerings Customers can search for only supplier offerings 39

40 03 XOM Industry Platform will be a multi-sided platform which facilitates transactions between all market participants Business model expansion timeline Supply side Customer and distribution side Mills Distributors Customers Steel Specialty metals Steel Specialty metals Addtl. industries Purchasing Fulfillment Software integrations Ads Cust. support Finance Software integrations 40

41 03 Value will be created for all participants by significantly improving supply and demand matching Customers Efficiency gains in purchasing organization due to higher automation in data handling Better pricing conditions due to higher transparency Faster delivery times due to network-enforced demand matching Faster purchase realization cycles Distributors Lower transaction costs with positive impact on COGS Access to larger global customer base with positive impact on total revenues Ability to outsource/ reduce higher costs positions such as warehousing Better demand forecasting allows for less stockholding and therefore lower NWC Better footprint expansion - especially smaller and medium sized distributors will gain the ability to compete nationwide due to platform services such as fulfillment and finance Suppliers/ Producers Higher direct sales opportunity due to better understanding of customer demand Better demand and production planning accuracy Less dependency on distributor network and relationships Better demand forecasting allows for better production control and consequently less stockholding and therefore lower NWC 41

42 03 Step by step launch targeting first small and medium sized distributors, then expansion to larger distributors and eventually the supply side Today Launch: Q4 2017/ Q Launch: Launch: 2020 Onlineshop Customer and distribution side Value-added services Supply side Commoditized products Commoditized products Commoditized products Commoditized products 42

43 03 The total addressable market in the US and Europe amounts to 250bn USA Europe Core Distribution Business TAM ~ 70bn US Steel Supply (Mills) TAM ~ 60bn Core Distribution Business TAM ~ 70bn EU Steel Supply (Mills) TAM ~ 50bn ~1,200 4% Reliance Ryerson Kloeckner Metals ThyssenKrupp Others ~3,000 5% Arcelor Mittal ThyssenKrupp KCO Salzgitter Tata Others Both markets are highly fragmented with no dominant players which favors open industry wide platforms 43 Source: WorldSteel, Applico Inc.

44 Agenda 1 Overview 2 Digitalization of KCO 3 Platform strategy 4 Focus of kloeckner.v 5 Further initiatives to support the digital transformation of Klöckner & Co Digital strategy Klöckner & Co SE October 2017

45 04 kloeckner.v invests in B2B business models which add value to the platform SUPPLIERS Proprietary online portals and internal digitalization Onlineshop Contract Portal Part Manager EDI (ERP-2-ERP) CUSTOMERS Commodity and specialized HVA services 3RD PARTIES OTHER DISTRIBUTORS/ SSC 45 Digital strategy Klöckner & Co SE October 2017

46 04 Strengthening our industrial platform via startup investments kloeckner.v invests in best-in-class startup teams with innovative, disruptive, and scalable business models that complement or extend our digital strategy. kloeckner.v portfolio companies profit through access to Klöckner & Co s industry knowledge and the kloeckner.i digital expertise. We leverage Klöckner & Co s cross-industry network to provide exceptional growth opportunities and eliminate key business risks in a conservative market environment. Digital strategy Klöckner & Co SE October 2017

47 04 kloeckner.v fund investments Overview of our VC-investments Our aims 3 rd investment to come (short term) We don t want to have an own VC-team, but portfolio diversification VC-Fund, Berlin, Germany Early stage investments in Amorelie Debitos Flaconi Lesara Flip4New VC-Fund, Palo Alto, USA Early stage investments in Apigee (IPO) GoPro (IPO) Virident (acquired by Western Digital) Yume (IPO) Groupon (IPO), Telera (acquired by Alcatel) VxTel (acquired by Intel) Serious talks Investment amount ~ 5m Insights in US and DACH deals Ability to approach individual companies Discuss ideas with VCs VCs access to corporate point of view 47 Digital strategy Klöckner & Co SE October 2017

48 04 kloeckner.v direct investments Overview of our direct investments Trading platform for tools, located in Berlin, Germany Combination of both, marketplace and e-commerce Exited in Q Sold stake to Hoffmann SE Technology startup, located in Berlin, Germany Produces 3D printing technologies and additive manufacturing On track to become the leading provider of additive manufacturing systems within the next five years 48 Digital strategy Klöckner & Co SE October 2017

49 Deal rationale 04 Divestment of stake in retail specialist Contorion Founded in 2014, headquartered in Berlin, Germany Digital retail specialist for professional tool and industrial supply Wide portfolio comprising 350,000 products such as tools, welding and chemical products, screws, fittings, garden supplies, steel & metal products Contorion offers a one-stop-shop solution to the mid-sized and small business sectors We invested a single-digit million amount (stake of 8%) in Contorion in Q Investment purpose was to sell steel sheets in large amounts via Contorion Divestment since VC-contracts enforce minority shareholders to step back and sell in further capital stages Sold our stake to Hoffmann SE, a tool selling specialist Doubled our invested fund within a year, receiving a cash-in of ~ 8m (= 115%) It was one of our first VC investments which turned out to be pretty successful 49 Digital strategy Klöckner & Co SE October 2017

50 04 3D printer specialist BigRep Founded in 2014 BigRep develops and manufactures large-scale, industrial 3D printers The company uses the extrusion of thermoplastic material as printing technique BigRep currently offers two printer models, BigRep One and BigRep Studio Product portfolio to be developed and expanded further on In addition the company also offers software, services (set-ups, training, etc.) and materials (filaments) used in the printing process Key distribution markets are prototyping, design, education, architecture, furniture, etc. Headquartered in Berlin with offices in Singapore and New York, BigRep has over 70 employees Scalable & asset light business model as manufacturing is outsourced Klöckner & Co along with Köhler Paper Group and Körber AG major strategic investors 50 Digital strategy Klöckner & Co SE October 2017

51 Agenda 1 Overview 2 Digitalization of KCO 3 Platform strategy 4 Focus of kloeckner.v 5 Further initiatives to support the digital transformation of Klöckner & Co Digital strategy Klöckner & Co SE October 2017

52 05 A variety of initiatives support the cultural transformation of KCO further Learn and failure culture Digital enabling of employees through online courses during working hours and initiatives like Fuck-up nights Connected enterprise Hierarchy-free communication to enable horizontal and vertical communication Engaged employees Many additional initiatives and events throughout the company to engage employees 52 Digital strategy Klöckner & Co SE October 2017

53 05 The Digital Academy supports the cultural change towards a higher digital learning curve within the workforce More than 900 participants signed up on this Yammer group (Digital Academy is largest group) In collaboration with various providers (University Duisburg Essen, Berlin School of Digital Business, Haufe) Accessible to all employees Employees are encouraged to train themselves during regular working hours Enabling employees to become digital experts based on a wide curriculum, e.g. latest E-Business license course from University Duisburg-Essen with currently >260 active participants 53 Digital strategy Klöckner & Co SE October 2017

54 05 Yammer as major internal hierarchy-free communication channel Hierarchy-free internal social network to share information and ideas as well as discuss about various topics Agile introduction without extensive preparation Viral distribution of tool via employees inviting other employees Very responsible interaction of employees with only small set of rules Elimination of hierarchical communication formats like CEO Former problem of information filtration by middle management solved Tool enables CEO to communicate with employees of all hierarchical levels directly Supports KCO cross-border interaction via integrated translation tool Major tool to communicate digitalization strategy Very high group wide member engagement since launch in October 2014 until end of August 256 discussion groups postings members 54 Digital strategy Klöckner & Co SE October 2017

55 05 The Digital Experience Program enables information exchange between KCI and sales employees from different branches of KCO Short-term assignment program of 3-4 months Enables employees of KCO to become familiar with the digitalization process and lean processes of KCI Increases transparency about the activities of KCI Increases awareness of platforms, portals and other tools offered by KCI to support KCO Transfer metal knowledge and customer experience Participants express very positive feedback and recommend the further development of the program 55 Digital strategy Klöckner & Co SE October 2017

56 05 KCO is also supporting the integration of refugees as main sponsor of ReDI School of Digital Integration Free of charge programming training and networking opportunities for refugees Provision of laptops and workstations in co-working spaces across Berlin Volunteer teachers and mentors are all employed in renowned IT companies KCO as main sponsor and provider of free office space for ReDI First graduates of ReDI School hired for KCI Gained significant attention through prominent visitors 56 Digital strategy Klöckner & Co SE October 2017